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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the Fiscal Year Ended: June 30, 2023

For the transition period from: __________ to __________

Commission File No. 000-19333

BION ENVIRONMENTAL TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in its Charter)

9 East Park Court

Old Bethpage, New York11804

(Address of Principal Executive Offices, Including

Zip Code)

Registrant’s Telephone Number, including area

code: (516)586-5643

Securities Registered Pursuant to Section 12(b) of

the Act:

Title of Each Class Name of Exchange on Which Registered

None N/A

Securities Registered Pursuant to Section 12(g) of

the Act:

Common Stock, No Par Value

(Title of Class)

Indicate by check mark if the registrant is a well-known

seasoned issuer, as defined in Rule 405 of the Securities Act.

☐ YES

☒No

Indicate by check mark if the registrant is not required

to file reports pursuant to Section 13 or Section 15(d) of the Act.

☐ YES

☒No

Indicate by check mark whether the registrant (1)

has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months

(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements

for the past 90 days.

☒Yes☐ NO

Indicate by check mark whether the registrant has

submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding

12 months (or for such shorter period that the registrant was required to submit).

☒Yes☐ NO No

Indicate

by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,

to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this

Form 10-K or any amendment to this Form 10-K. ☒

Indicate by check mark whether the registrant is a

large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large

accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company”

in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☒

Emerging growth company ☐

an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying

with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a

shell company (as defined in Rule 12b-2 of the Act)

☐ YES

☒No

The aggregate market value of the approximately 37,000,000

shares of voting stock held by non-affiliates of the Registrant as of June 30, 2023 approximated $46.5 million. As of August 1,

2023, the Registrant had 49,408,214 shares of common stock issued and 48,703,905 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

FORWARD-LOOKING STATEMENTS

THE RISK FACTORS BELOW ARE FURTHER HEIGHTENED BY THE

COVID-19 PANDEMIC AND RESULTING ECONOMIC DOWNTURN AND OTHER RELATED CRISES AS DISCUSSED BELOW.

This Annual Report on Form 10-K (and the documents

incorporated herein by reference) contain forward-looking statements, within the meaning of Section 27A of the Securities Act and Section

21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that involve substantial risks and uncertainties.

Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will,"

"expect," "intend," "estimate," "anticipate," "project," "predict," "plan,"

"believe," or "continue," or the negative thereof or variations thereon and/or references to goals, targets, projections

or similar terminology. The expectations reflected in forward-looking statements may prove to be incorrect.

Important factors that could cause actual results

to differ materially from our expectations include, but are not limited to, the following (not set forth in any order that ranks priority

or magnitude):

· the ability of the Company to implement its business strategy;

· seasonal and climatic conditions;

· the strength and financial resources of the Company's potential competitors;

· industry risks, including environmental related problems;

· delays in anticipated permit approval and/or start-up dates;

We do not undertake and specifically disclaim any

obligation to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence

of anticipated or unanticipated events or circumstances after the date of such statements.

PART I

ITEM 1. BUSINESS.

GENERAL

Summary and Overview

Bion Environmental Technologies, Inc.'s ("Bion," "Company,"

"We," "Us," or "Our") was incorporated in 1987 in the State of Colorado. Bion’s mission is to create

extraordinary value for our shareholders and employees (all of whom own securities in the Company) while delivering premium, sustainable

meat products to our customers (and other stakeholders) through ventures developing profitable, transparent, and environmentally sustainable

solutions for livestock agriculture. Bion’s third generation technology-based platform (“Gen3Tech Platform” or

“Platform”) provides comprehensive environmental treatment for large-scale livestock waste streams (and other organic waste

streams), while simultaneously recovering resources that have traditionally been wasted or underutilized. Bion’s platform performs

the dual benefits of improving profitability of production by upcycling those resources into value-added byproducts, while preventing

their release to the environment, where they contribute to surface- and groundwater and air pollution, climate change, and other air quality

issues.

Bion has identified three distinct market

opportunities for the Gen3Tech platform and its core Ammonia Recovery System (“ARS”) technology that captures,

stabilizes, and upcycles ammonia into low-carbon and/or organic pure nitrogen fertilizers. Bion intends to pursue: 1) a unique

opportunity to ‘reimagine’ beef production ( within the existing industry supply chain) to produce premium and

sustainable grain-finished beef, with minimal impacts to water, soil, and air, and better economics to its producers; 2) technology

licensing and/or joint venture opportunities internationally and in the U.S. for post-anaerobic digester use of our ARS: a) dairy

applications, and b) treatment of organic waste streams from food waste, food processing waste, biofuels, and other organic waste

streams whose processes include anaerobic digestion to produce renewable energy; and 3) retrofit of existing large-scale livestock

facilities, of which there are hundreds of operations in the U.S. alone (if not thousands – the exact number is not

reported).

Currently, Bion’s efforts are primarily focused on the sustainable

beef production opportunity. We believe there is tremendous room for improvement in the beef production in this country. The beef industry

today faces a wide range of challenges, from a fragmented commodity-producing industry with narrow margins to antiquated and inefficient

production practices. Beef production and consumption is a primary target of the global ‘anti-meat’ messaging campaign from

consumer, investor, and environmental advocacy groups (and the industry’s competitors in the alternative plant-based and cellular

protein spaces). Bion intends to produce truly sustainable beef, certified by USDA, with dramatic, third-party verified reductions in

the negative environmental effects by mitigating nutrient, greenhouse gas, and other environmental impacts. To accomplish Bion’s

goal, we will partner with producers and other technology companies who provide solutions for different links of the beef value chain.

Our joint venture/strategic partner-focused business model is designed to deliver a premium sustainable product to the consumer and increased

profitability up and down the supply chain.

During September 2023, Bion successfully

completed the initial startup of its patented Ammonia Recovery System (“ARS)” at its commercial-scale demonstration and

optimization facility near Fair Oaks, Indiana. The facility has now commenced an operational ‘optimization’ phase during

which modules will be tested/stressed to determine their operational characteristics and establish the best parameters (and related

control systems) for long term operation. We have begun varying the ARS’s operating parameters with the goal of meeting and/or

exceeding the results needed for Bion’s economic models for large-scale commercial projects. The Company expects the current

optimization phase will continue during the next quarter (or longer) and provide data required to support final design/engineering

for commercial project modules. We believe this data will also provide additional potential stakeholders (cattle producers, cattle

feeders, packers, distributors, retailers and financial institutions) with the information they need to proceed with confidence in

collaborating with Bion on multiple new projects. The ARS is the core of the Gen3Tech platform. Once its operations have been

optimized, Bion will be able to begin final design to support permitting, and financing of its first commercial beef project.

To Bion’s knowledge, there is no comprehensive treatment solution

for beef manure waste other than our Gen3Tech Platform. Further, Bion’s business model, which addresses the entire supply chain,

creates additional opportunities to improve on both environmental impacts and production efficiencies. Bion has 30 years of experience

in livestock waste management and is building a world class team, focused on beef. We believe we have a significant advantage as the $66

billion U.S. beef industry contends with its environmental impacts, inherent inefficiencies, and a changing consumer demographic.

Our patented and proprietary technology provides advanced

waste treatment and resource recovery for large-scale livestock production facilities (also known as “Concentrated Animal Feeding

Operations” or “CAFOs"). Livestock production and its waste, particularly from CAFOs, has been identified as one of the

greatest soil, air, and water quality problems in the U.S. today. Application of our third generation technology (“Gen3Tech”)

and business/technology platform in conjunction with other industry practices (“Gen3Tech Platform” or “Platform”)

can largely mitigate these environmental problems, while simultaneously improving operational/ resource efficiencies by recovering high-value

co-products from the CAFOs’ waste stream. These waste stream ‘assets’ – including primarily nutrients and methane

– have traditionally been wasted or underutilized and are the same ‘pollutants’ that today fuel harmful algae blooms,

contaminate groundwater, pollute the air and exacerbate climate change.

During the first half of 2022 Bion began

pre-marketing our sustainable beef opportunity to retailers, food service distributors and the meat industry in the U.S. In general,

the response has been favorable. During July 2022, Bion announced a letter of intent (“Ribbonwire LOI”) to develop a large-scale

commercial project - a 15,000-head sustainable beef cattle feeding operation together with the Ribbonwire Ranch, in Dalhart, Texas (with

a provision to expand to 60,000 head) (“Dalhart Project”). During January 2023 Bion announced a letter of intent (“Olson

LOI”) to develop a large-scale commercial project - a 15,000-head sustainable beef cattle feeding operation together with the Olson

Feeders and TD Angus, near North Platte, Nebraska (with a provision to expand to 45,000 head or more) (“Olson Project”). During

April 2023 Bion announced a letter of intent (“DVG LOI”) to develop a large-scale commercial project - a 15,000-head sustainable

beef cattle feeding operation together with Dakota Valley Growers near Bathgate, North Dakota (“DVG Project”). Based on our

experience to date, we believe we will not have great difficulty in securing participation from additional feeders/cattlemen in our Projects.

The Olson, Dalhart and DVG Projects (and subsequent Projects) will be developed to produce blockchain-verified, sustainable beef in customized

covered barns (resulting in reduced stress on cattle caused by extreme weather and temperatures and resulting higher feed/weight gain

efficiency) with ongoing manure transfer (through slatted floors) to anaerobic digesters (AD) to capture nitrogen/ammonia from the manure

stream before loss to the atmosphere and generate renewable natural gas (RNG) for sale while remediating the environmental/carbon impacts

usually associated with cattle feedlots and CAFOs. Bion’s patented Gen3Tech platform will refine the waste stream into valuable

coproducts that include clean water, RNG, photovoltaic solar electricity and fertilizer (‘climate smart’ and/or organic) products.

We anticipate converting these LOIs into definitive JV agreements and creating related distribution agreements with key retailers and

food service distributors during the current fiscal year and the balance of 2024.

Bion’s business model and technology platform

can create the opportunity for joint ventures (in various contractual forms)(“JVs”) between the Company and large livestock/food/fertilizer

industry participants based upon the supplemental cash flow generated by implementation of our Gen3Tech business model, which cash flows

will support the costs of technology implementation (including servicing related debt). We anticipate this will result in substantial

long-term value for Bion. In the context of such JVs, we believe that the verifiable sustainable branding opportunities (conventional

and organic) in meat will represent one of the single largest enhanced revenue contributors provided by Bion to the JVs (and Bion licensees).

The Company believes that the largest portion of its business with be conducted through such JVs, but a material portion may involve licensing

and or other approaches.

Bion’s Gen3Tech was designed to capture and

stabilize these assets and produce renewable energy, fertilizer products, and clean water as part of the process of raising verifiably

sustainable livestock. All steps and stages in the treatment process will be third-party verified, providing the basis for additional

revenues, including renewable energy-related credits and, eventually, payment for ecosystem services, such as nutrient credits as described

below. The same verified data will be used to substantiate the claims of a USDA-certified sustainable brand that will support premium

pricing for the meat/ animal protein products that are produced in Bion facilities.

Our business plan is focused on executing

multiple agreements and letters of intent related to additional sustainable beef JV projects over the next twenty-four (24) months while

moving forward with the Initial Project (see below) and commencing development of one or more of the Dalhart/Olson/DVG Projects (“LOI

Projects”)(and/or other Gen3Tech beef JV projects) while pursuing other opportunities in the livestock industry enabled by our Gen3Tech

business model. The LOI announcements have generated significant interest within the livestock industry (among ranchers, feedlot

operators, farmers and other AG industry parties) and has led to and assisted our discussions with many ‘major s’---large

national and regional agriculture/livestock industry companies (including those involved with distribution and/or sales of meat products)

in the country which are ongoing at this date. We believe that this interest, combined with consumer interest in ‘sustainable products’

and growing enthusiasm among some livestock industry parties for environmental/sustainable/regenerative practices, may provide Bion (and

its partners/venturers) with an opportunity to move forward with a truly sustainable solution in this industry segment at a rapid pace.

Based on our endeavors in executing multiple

agreements and letters of intent related to the “Bion Beef Opportunity”, we intend to commence development of multiple sustainable

beef JV projects over the next twelve-eighteen (12-18) months while moving forward with the Initial Project (see below) and one or more

of the LOI Projects. Bion also intends to pursue other opportunities in the livestock industry enabled by our Gen3Tech business model.

During the past nine months, the Company has constructed

(construction is largely completed) our 3GTech Ammonia Recovery System (‘ARS’) at our Initial Project (our commercial scale

demonstration facility) located near Fair Oaks, Indiana and begun operations of phase 1 of our Initial Project . We recently announced

that the ARS has achieved and maintained controlled steady-state operations under a variety of conditions. When operated at steady state,

the system produces an ammonium distillate solution, the base of Bion’s nitrogen fertilizer products. Bion has begun optimizing

the ARS’s operating parameters with the goal of meeting and/or exceeding the results needed for Bion’s economic models for

large-scale commercial projects. The Company expects the current optimization phase will continue during the next quarter (or longer)

and provide data required to support final design/engineering for commercial project modules. We believe this data will also provide additional

potential stakeholders (cattle producers, cattle feeders, packers, distributors, retailers and financial institutions) with the information

they need to proceed with confidence in collaborating with Bion on multiple new projects (see below).

The patented ARS is the core of Bion’s Gen3Tech platform.

The ARS recovers and upcycles problem ammonia contained in the effluent from anaerobic digestion (where methane is captured and more ammonia

is released) of the livestock manure waste stream. The ARS captures the ammonia, minimizing its environmental impacts and creating low-carbon

and/or organic nitrogen fertilizer products with it. Over during the next quarter, the Company intends to produce ammonium distillate

at Fair Oaks in several concentrations and initiate the application process for organic certification for each concentration of liquid

fertilizer product. Bion will also produce a solid/granular nitrogen fertilizer product at the Initial Project (when the crystalizer module

is ready for operation during the next quarter) which we believe will be both ‘ClimateSmart’ and ‘Water-Smart’

– a pure nitrogen fertilizer with a low carbon footprint, that is water soluble and readily available to plants. Samples of the

granular product will also be utilized to support organic certification applications. See Fertilizer: Organic and ‘ClimateSmart’

below.

During the next three-six months , the Company intends

to fully complete construction of the Initial Project’s phase 1 (including the crystalizer module) and continue the optimization

operations. Bion expects the Initial Project data will document the effectiveness of our Gen3Tech in a commercial-scale setting during

the current fiscal year and support development of the LOI Projects (and/or other Gen3Tech beef JV projects) commencing later this fiscal

year. We do not presently know the order in which these JV Projects will be developed as that decision will be made based on many

factors not yet in place. We believe the Initial Project data will also provide additional potential stakeholders (cattle producers, cattle

feeders, packers, food distributors and retailers and financial institutions) with the information they need to proceed with confidence

in collaborating with Bion on multiple new projects (see below).

Bion

intends to focus primarily on: i) completion of development/construction and operation of the Initial Project, our initial commercial-scale

Gen3Tech installation (see below and Notes to Financial Statements),

and optimization of its operational parameters, ii) pre-development planning of the Dalhart, Olson and DVG Projects (and/or other Gen3Tech

beef JV projects) including steps toward distribution agreements, iii) developing applications and markets for its low carbon ‘ClimateSmart’

and organic fertilizer products (including listings/certifications of multiple liquid and solid products) and its sustainable (conventional

and organic) animal protein products, and iv) discussions regarding initiation and development of agreements and joint ventures (“JVs”

as discussed herein) (and related Projects) based on the augmented capabilities of our Gen3Tech business platform (in the sustainable

beef and other livestock segments), while (v) continuing to pursue : A) licensing opportunities and B) business opportunities related

to large retrofit projects (such as the Kreider poultry project JV described below) and vi) ongoing R&D activities.

At present, there is essentially no traceable and

verifiable ‘sustainable beef’ available to the US market except for niche products. In response to consumer demand for transparency

and sustainability, Bion expects the meat industry in general, and beef specifically, to evolve towards using new technologies to deliver

these attributes in their products. While we anticipate a faster adoption of tracking, verification and sustainability technologies in

other perishable food categories like produce and dairy due to their shorter product cycles (and related harvest and production techniques),

meat industry leaders have also announced their willingness to move forward with initiatives in this area. Many companies have announced

‘sustainability’ initiatives but most appear to consist largely of ‘greenwashing’ marketing commitments rather

than substantive undertakings at this date. Note, however, that Tyson’s Brazen beef initiative (which was announced during March

2023) may develop into a substantive competitive factor in the sustainable beef marketplace. Bion predicts that within approximately five

years, consumers will be able to track and verify claims including sustainability on 25% (or more) of the products merchandised in the

meat department. Bion believes that the retail market share of verifiably sustainable beef in the US will approach 7-10 % within three

(3) years (end of 2026) and 25% in five (5) years (end of 2028) (approximately 6-7,000,000 cattle annually) (and more thereafter). If Bion

can successfully execute on its sustainable beef business plan (which is subject to many contingencies), we believe that JV facilities

utilizing Bion’s Gen3Tech platform will supply one-third (1/3) or more of that of the premium market segment (and a higher portion

of meat that is actually traceable and verifiably sustainable). Our goal is to have multiple sustainable beef projects under development

(within 3-5 distinct JVs) by the end of our 2025 fiscal year. Our first commercial project is likely to be one of our current LOI Projects

but we anticipate commencing development of additional sustainable beef projects during the current fiscal year as well. Our current target

is to have at least three (3) facility modules (15,000 head per module)(“Modules”) in development and/or under construction

during 2024 in three (3) different JVs with the initial barns being populated with livestock during 2025. Further expansion in the number

of distinct JVs is projected through 2026-7 aiming at 5-10 JVs in process --- each of which JVs will be pursuing development of multiple

Modules with targets of 12-15 populated Modules by the end of 2026 (approximately 2%-3% of the US beef market) and 30-45 Modules constructed

and being populated by 2029 (approximately 6%-8% of the US beef market) with further expansion thereafter. Bion’s current goal is

that its Gen3Tech platform will be utilized to produce 33% of the verifiable “sustainable beef” category at the end of the

period (which will equal approximately 2 million cattle annually)(45 Modules).

There is no assurance that the Company will reach

or approach the goals/targets set forth above. Reaching such goals/targets will require access to very large amounts of capital (equity

and debt) as each module is projected to cost in excess of $50 million to construct and require mobilization of substantial personnel,

technical resources and management skills. The Company does not possess either the financial or personnel resources required internally

and will need to source such resources from outside itself.

During this five (5) year period, the Company also

anticipates having additional Gen3Tech projects underway in the pork/dairy/egg sectors of the US animal protein market.

In parallel with the business activities outlined

above, during the current fiscal year the Company intends to proceed with adding to its senior management personnel, while strengthening

its corporate governance (including environmental/social/governance steps (‘ESG’)) and seeking to ‘uplist’ its

common stock on a national securities exchange improve both liquidity and ability to access capital markets.

HISTORY, BACKGROUND AND CURRENT ACTIVITIES

Since the Company’s inception, Bion has

designed and developed advanced waste treatment systems for livestock. The first and second generations of Bion’s technology platform

were biological systems, primarily focused on nutrient control. Over 30 of these systems were deployed at New York dairies, Florida food

processing facilities and dairies, North Carolina hog farms, a Texas dairy and a Pennsylvania dairy (“Kreider 1 Project”).

The systems were highly effective at their intended purpose: capturing nitrogen and phosphorus. They produced BionSoil as a byproduct,

which was a remarkably effective soil amendment/ fertilizer product, but whose value was not enough to support a viable business model.

As such, these early technology iterations were entirely dependent on either implementation of new regulations requiring waste treatment,

or subsidy/ incentive programs that would provide ‘payment for ecosystem services’. By the mid-2010’s, it became apparent

that neither of these options were imminent or even assured, so the Company initiated the steps to reimagine and redesign its technology.

From 2016 to 2021 fiscal years, the Company focused

most of its activities and resources on developing, testing and demonstrating the third generation of its technology and technology platform

(“Gen3Tech”) that was developed with an emphasis producing more valuable co-products from the waste treatment process, including

renewable natural gas and ammonium bicarbonate, a low-carbon, organic ’pure’ nitrogen fertilizer product, while raising sustainable

livestock.

The $175 billion U.S. livestock industry is under

intense scrutiny for its environmental and public health impacts – its ‘environmental sustainability’-- at the same

time it is struggling with declining revenues and margins (derived in part from clinging to its historic practices and resulting limitations

and impacts) which threaten its ‘economic sustainability’. Its failure to adequately respond to consumer concerns including

food safety, environmental impacts, and inhumane treatment of animals have provided impetus for plant-based alternatives such as Beyond

Meat and Impossible Burger (and many others) being marketed as “sustainable” alternatives for this growing consumer segment

of the market (despite the lack of verifiably sustainable attributes).

The Company believes that its Gen3Tech, in addition

to providing superior environmental remediation, creates opportunities for large scale production of i) verifiably sustainable-branded

conventional livestock products and ii) verifiably sustainable organic-branded livestock products, both of which will command premium

pricing (in part due to ongoing monitoring and third-party verification of environmental performance which will provide meaningful assurances

to both consumers and regulatory agencies). Each of these two distinct market segments (which the Company intends to pursue in parallel)

presents a production/marketing opportunity for Bion (but the former is far larger). Our Gen3Tech will also produce (as co-products) biogas,

solar photovoltaic electricity in appropriate locations, and valuable low carbon/organic fertilizer products, which can be utilized in

the production of organic grains for use as feed for raising organic livestock (some of which may be utilized in the Company’s JV

projects) and/or marketed to the growing organic fertilizer market.

During 2022-23, the Company entered into 3 LOIs setting

forth the parties’ intention to negotiate joint venture agreement (“JVA”) and enter into joint ventures (“JV”)

to develop and operate 15,000 head integrated, sustainable beef facilities (with future expansion under consideration) including:

The opportunity presented by the LOIs to

commercialize the Company’s Gen3Tech and business model matured more quickly than anticipated (reflecting strong industry and public

momentum in favor of verifiably sustainable food ventures). As a result, we have shifted our plans to focus resources and make our initial

15,000 head operation a reality as soon as possible.

To place the LOI Projects in the context of Company’s

business plan (and our prior public disclosure), if the contemplated ventures moves forward on the timelines currently contemplated, active

development of the initial LOI Project will commence during 2024.

Prior to such activity, the Company has constructed

and commenced operation of the initial phase of our previously discussed Gen3Tech demonstration project near Fair Oaks, Indiana (“Initial

Project”): i) to validate our existing data and modeling at commercial scale and ii) to optimize the Bion Gen3Tech module for finalization

of design parameters and fabrication details of our planned 15,000 head commercial facilities (including the LOI Projects). For the purposes

of this initial phase, the Company, in order to accelerate the data acquisition phase, is utilizing anaerobic digester effluent from the

nearby/contiguous Fair Oaks dairy. Thereafter, the Company will evaluate what, if any, additional facilities and testing will take place

at that location.

The Initial Project is not being developed at economic

commercial scale or with an expectation of profitability due to its limited scale. However, successful installation, commissioning, and

operations will demonstrate scalability, determine operating parameters at scale, and provide ongoing production and engineering capabilities,

all being critical steps that must be accomplished before developing large projects with JV partners.

During September 2021, Bion entered into a lease for

the development site of the Initial Project, our initial commercial scale Gen3Tech project, which Initial Project will be located on approximately

four (4) acres of leased land near Fair Oaks, Indiana, and a related agreement regarding disposal of certain manure effluent with the

Curtis Creek Dairy unit of Fair Oaks Farms (“FOF”). Design and pre-development work commenced during August 2021 and preliminary

surveying, site engineering and other work is now underway along with site-specific engineering and design work. The Initial Project was

initially planned to be an environmentally sustainable beef cattle feeding facility, equipped with state-of-the-art housing and Bion’s

3G-Tech platform to provide waste treatment and resource recovery. Bion has designed the project to house and feed approximately 300 head

of beef cattle. If all phases of the Initial Project are constructed, the facility will include Bion’s Gen3Tech platform including:

i) covered barns (possibly including roof top solar photovoltaic generation), ii) anaerobic digestion for renewable energy recovery, iii)

livestock waste treatment and resource recovery technology, iv) Bion’s ammonium bicarbonate recovery and crystallization technology

and iv) data collection software to document system efficiencies and environmental benefits (with the Bion Gen3Tech facilities capable

of treating the waste from approximately 1,500 head). The facility is large enough to demonstrate engineering capabilities of Bion’s

Gen3Tech at commercial scale, but small enough that it can be constructed and commissioned relatively quickly. Originally, construction

and onsite assembly operations were targeted to commence sometime late in 2022, however, supply chain backlogs (many pandemic associated)delayed

delivery dates for core modules of the Bion system to the site until during January 2023. Construction has been substantially completed

related to Phase 1 of the Initial Project, shakedown operations undertaken and the operation is now focused on optimization of operation

parameters. See Note 3 “Property and Equipment” and Note 12 “Subsequent Events” (for activities since the start

of the first quarter of the 2024 fiscal year).

The Initial Project is not being developed at economic

commercial scale or with an expectation of profitability due to its limited scale. However, successful installation, commissioning, and

operations will demonstrate scalability, determine operating parameters at scale, and provide ongoing production and engineering capabilities,

all being critical steps that must be accomplished before developing large projects with JV partners.

Specifically, the Initial Project was designed/developed

to provide and/or accomplish the following:

i. Proof of Gen3Tech platform scalability

iv. Produce sustainable beef products for initial test marketing efforts.

On January 28, 2022

Bion Environmental Technologies, Inc. (‘Bion’), on behalf of Bion 3G1 LLC (‘3G1’), a wholly-owned

subsidiary, entered into a Purchase Order Agreement with Buflovak and Hebeler Process Solutions (collectively

‘Buflovak’) in the amount of $2,665,500 (and made the initial 25% payment ($666,375) for the core of the ‘Bion

System’ portion (without the crystallization modules which will be ordered and fabricated pursuant to subsequent

agreements) of the previously announced 3G Tech Initial Project. This Purchase Order encompasses the core of Bion’s 3G

Technology. Subsequent agreements were executed with engineering firms, contractors and other entities related to the construction

of the Initial Project. The Company received progress billing in March 2022 and June 2022 for the second and third 25% installments,

both of which have been paid as of the filing date. On January 17, 2023 the Company received an invoice from Buflovak for $533,100

which was paid on March 1, 2023 and on April 24, 2023 for $83,275 which was paid on May 2, 2023 bringing the aggregate payments to

$2,615,500 as of the date of this filing. There remaining $50,000 open on the Purchase Order has been billed on July 26,2023. In

addition to the Purchase Order, the Company has incurred additional costs of $4,182,260 on the Initial Project for capitalized

interest and costs, non-cash compensation and consulting fees. $3,962,207 has been paid and $220,053 has been billed and not yet

been paid.

The Initial Project will be carried out in stages

with phase one focused largely on portions of items i. and iii. set forth above.

Upon completing the primary goals of phase 1 of the

Initial Project (coupled with obtaining organic certifications(s) for our liquid and/or solid ammonium bicarbonate fertilizer product

lines), Bion expects to be ready to move forward with its plans for development of much larger facilities such as the LOI Projects, by

moving toward final design of its Gen3Tech modules. The Company anticipates that discussions and negotiations it has begun (together with

additional opportunities that will be generated over the next 12-24 months) regarding potential JVs with strategic partners in the financial,

livestock and food distribution industries to develop large scale projects will continue during the optimization operations of the Initial

Project with a 2024 goal of establishing multiple JV’s for large scale projects that will produce sustainable and/or sustainable-organic

corn-fed beef. These products will be supported by a USDA PVP-certified sustainable brand that will, initially, highlight reductions in

carbon and nutrient footprint, as well as pathogen reductions associated with foodborne illness and antibiotic resistance, along with

the organic designation where appropriate. Bion has successfully navigated the USDA PVP application process previously, having received

conditional approval of its 2G Tech platform (pending resubmission and final site audits), and is confident it will be successful in qualifying

its Gen3Tech platform.

After the basic technology start-up milestones of

the Initial Project (primarily optimization and steady-state operations of the core modules of our Gen3Tech platform) have been met, the

Company will determine whether to complete the entire Initial Project as originally designed at that location or the relocate the core

modules to an alternative permanent location. The Company has engaged in discussion with the University of Nebraska-Lincoln to jointly

develop an integrated beef facility based on Bion’s Gen3Tech and business model at its Klosterman Feedyard Innovation Center (“KFIC”)

(or other mutually agreed upon location) which facility would include innovative barns, an anaerobic digester and a Bion Gen3Tech system

to conduct ongoing research and development related thereto and the KFIC is a possible site for the long-term re-location of the core

modules. This venture, if it moves forward, is anticipated to include joint preparation of applications for grants and other funding from

the USDA (‘climate smart’ program, rural development, etc.) and other sources. The Company will also evaluate re-locating

the core module of the Initial Project to Dalhart, Texas, where it might be integrated into the first phases of the Dalhart Project and/or

to other locations.

Additionally, the Company believes there will also

be opportunities to proceed with selected ‘retrofit projects’ of existing facilities (see ‘Gen3Tech Kreider 2

Poultry Project’ below as an example) in the swine, dairy and poultry industries utilizing our Gen3Tech.

Gen3Tech Beef Business Model

As one of the largest contributors to some of the

greatest air and water quality problems in America, it is clear that livestock waste cleanup, at scale, represents one of the greatest

opportunities we have to reduce negative environmental impacts of the food supply chain on air and water quality. Bion’s Gen3Tech

platform, along with its business model, enables the cleanup of the ‘dirtiest’ part of the food supply chain: animal protein

production and creates the opportunity to produce and market verifiably sustainable organic and conventional ‘real meat’ products

that can participate in the growth and premium pricing that appears to be readily available for the ‘right’ products.

Bion believes that substantial unmet demand currently

exists– potentially very large – for ‘real’ meat/dairy/egg products that offer the verifiable/believable sustainability

consumers seek, but with the taste and texture they have come to expect from American beef and pork, dairy and poultry. Numerous studies

demonstrate the U.S. consumers’ preferences for sustainability. For example, 2019 NYU Stern’s Center for Sustainable Business

study found that ‘products marketed as sustainable grew 5.6 times faster than those that were not...’ and that ‘...in

more than 90 percent of consumer-packaged-goods (CPG) categories, sustainability-marketed products grew faster than their conventional

counterparts.’ Sales growth of plant-based alternatives, including both dairy and more recently ground meat (Beyond Meat, Impossible

Foods, etc.) have shown that a large, but apparently limited, segment of consumers is choosing a seemingly sustainable offering, and are

also willing to pay a premium for it. Tyson Foods, in the context of launching its Brazen beef initiative, recently said, “consumers

would be willing to pay at least 24 percent more for environmentally friendly, sustainable options at retail.” Numerous studies

also support the consumers’ ‘willingness-to-pay’ (WTP) for sustainable choices, including a recent meta-analysis of

80 worldwide studies with results that calculate the overall WTP premium for sustainability is 29.5 percent on average.

In terms of changing customer preferences, ‘saving

the planet’ has proven to be a more compelling argument than the traditional animal activism/ welfare pitch. To date, the primary

beef ‘industry response’ to this has been grass-fed beef, which is regarded as a generally more sustainable offering than

grain-fed (largely without support in empirical evidence). However grass-fed beef has had only limited acceptance in U.S. markets, because

it is less flavorful and tougher than the traditional corn-fed beef consumers have grown to enjoy. Sustainability initiatives have been

launched by large US livestock producers (including Tyson’s very recent ‘Brazen’ program), but it is not yet possible

to determine the extent the attributes of such products will be substantive and verifiable rather than completely ‘modeled’

and largely public relations ‘greenwashing’.

Advocacy groups targeting livestock and the beef industry

have recently been joined by competitors that produce animal protein alternatives in seeking to exploit the industry’s environmental

and economic weaknesses. Their global anti-meat messaging has had a substantial chilling effect on the relationships the beef industry

has with its institutional investors; retail distributors, such as fast-food restaurants; and mostly, its consumers. Led by the United

Nations Food and Agriculture Organization, a coordinated anti-meat messaging campaign has targeted consumers worldwide, primarily focused

on the industry’s impacts on climate change. A 2018 NielsenIQ Homescan survey last year found that 39% of Americans are actively

trying to eat more plant-based foods. Some of the recent growth in plant-based proteins results from increasing lactose intolerance and

other health concerns; however, most of that growth is attributed to consumers’ growing concerns for the environmental impacts of

real meat and dairy. Several large US companies that have traditionally focused on livestock production, including Cargill, ADM, Perdue

Foods, and Tyson, have also recently entered the plant protein space. However, while meat alternatives, especially plant-based protein

producers like Beyond Meat and Impossible Foods, have been heavily promoted (by themselves and the media) and enjoyed remarkable initial

sales growth until recently, sales have flattened and/or declined over the past 18 months. It should be noted that these plant-based protein

producers are primarily expected to be able to serve the ground/ processed meat market, which represents only about 10 percent of the

overall animal protein market. Further, there has recently been pushback to these plant-based products, focusing on their highly processed

nature and unproven health benefits, scalability/ pricing, and their uncertain carbon footprint---and market growth rates have substantially

slowed and may have already plateaued and/or peaked. There have also been several companies recently enter the cellular and 3D-printed

meat arena. While facing myriad challenges and further out on the development timeline, some people believe cellular agriculture (aka

cultured, clean, lab-grown, cultivated) meat may have the potential to service a much larger percentage of the market than plant-based

protein, including cuts like steaks, chops and roasts, but the likely cost remains very uncertain at this point.

Each of these items supports Bion’s belief that

there is a potentially very large opportunity to supply premium verifiably sustainable beef products that address these consumer concerns.

We believe that the real meat/beef products that can be cost-effectively produced today using our Gen3Tech platform, both sustainable

and/or sustainable organic, can provide an affordable product that satisfies the consumer’s desire for sustainability, while providing

the superior taste and texture those consumers have grown to prefer.

While

the beef industry has largely continued historic practices, the dairy industry has housed milk cows in barns and has been processing cow

waste through anaerobic digesters (ADs) to generate energy for years. In recent years the renewable biogas (RNG) from the dairy ADshas become increasingly lucrative due to related environmental

credits.

Bion‘s sustainable beef business model, based

on our Gen3Tech platform, will develop and operate large scale facilities that: a) utilize custom designed barns (which enable a more

controlled and monitored husbandry environment) and photovoltaic solar electricity generation utilizing the rooftops (where climate conditions

permit), b) with continual manure transfer to anaerobic digesters (“ADs”), c) which produce RNG and related environmental

revenues, and d) then channel the AD waste (including CO2 recovered from the RNG processing/cleanup) through a series of patented technologies

to refine the waste into its various components. The diagram below depicts a simplified facility schematic/flow chart:

This overall business model unites several interrelated

businesses driven by Bion’s technology and augments and aggregates multiple revenue streams as described below. See “Technology

and Technology Platform” below for descriptions of the 4 major categories of products/revenue streams which Bion anticipates

from its Gen3Tech beef facilities: a) premium ‘sustainable branded’ beef, b) renewable energy and energy/environmental/carbon-related

credits, c) fertilizer products (organic and/or ‘ClimateSmart’) and d) nutrient credits.

Sustainable Beef

Bion’s goal is to be first (or at least early)

to market with meaningfully verified sustainable beef products that can be produced at sufficient scale to service national market demand.

The cattle produced at Bion facilities will have a substantially lower carbon footprint, dramatically reduced nutrient impacts to water

and air, and an almost total pathogen kill in the waste stream. Further, the economics of producing these cattle (including the cost of

the facility/technology upgrade) will be greatly enhanced by the revenue realized from the recovery of valuable resources, including renewable

energy, high-value fertilizer products, and clean water.

A Bion sustainable beef facility (see diagram above)

will be comprised of covered barns with slotted floors (allowing the waste to pass through) which will reduce ammonia volatilization and

loss to the atmosphere, as well as odors, thereby improving animal health and human working conditions while preventing air/soil/water

pollution. The manure will be collected and moved directly to customized anaerobic digestion facilities which will produce renewable natural

gas (and re-cycle CO2 from the gas cleaning process). Covered barns will reduce weather impacts on the livestock and have been demonstrated

to promote improved general health and weight gain in the cattle housed in them. The barns’ very large roof surface area will be

utilized (in appropriate geographical locations) for the installation of photovoltaic solar generation systems to produce electricity

for the facility, as well as export to the grid. The barn roofs will also be configured to capture rainwater, which, coupled with the

water recovered from the treatment process, will reduce the projects’ reliance on current water supplies.

Waste treatment and resource recovery will be provided

by Bion’s Gen3Tech platform, which Bion believes offers the most comprehensive solution for livestock waste available today. In

addition to direct environmental benefits, every pound of nitrogen that is captured, upcycled, and returned to the agricultural nitrogen

cycle as high-quality fertilizer (vs lost to contaminate downstream waters), is also a pound of nitrogen that will not have to be produced

as synthetic urea or anhydrous ammonia, with their tremendous carbon cost. System performance and environmental benefits will be monitored

and verified through third parties, with USDA PVP certification of the sustainable brand that Bion also believes will be the most comprehensive

available in the market.

Recently there have been efforts to establish sustainable

brands (including USDA PVP certification) for a number of small-scale livestock producers (largely in the grass fed beef category). To

date, the reach and extent of such efforts is limited and it is difficult to determine their effectiveness. Additionally, there have

been public announcements of initiatives related to beef sustainability (largely focused on the ‘cow-calf’ segment of the

livestock chain) in procurement by major beef processing companies, but a closer look finds that most consist largely of ‘green

washing’ public proclamations in the wake of environmental and social criticism that re-package prior initiatives and lack any significant

new substance (excepting Tyson’s ‘Brazen’ announcement this past Spring which appears to have some substance).